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469(c)(1); Fowler v. Commissioner, T.C. Memo. 2002-223; sec.
1.469-9(e), Income Tax Regs.
The parties disagree on a number of different points
concerning the application and relevance of section 469 to
petitioner’s rental activities. Among those disagreements, they
dispute whether section 469(c)(7) applies. Petitioner claims
that section 469(c)(7) applies to her for the year in issue, and
therefore section 469(c)(2) does not apply for that year;
respondent disagrees. Under the circumstances, if section
469(c)(7) does not apply to petitioner for 2002, then she is
subject to section 469(c)(2) for that year, which means that the
rental loss is a passive activity loss and she is not entitled to
the rental loss deduction here in dispute.
Section 469(c)(7) does not apply to a taxpayer unless, in
addition to another requirement, “more than one-half of the
personal services performed in trades or businesses by the
taxpayer during such taxable year are performed in real property
trades or businesses in which the taxpayer materially
participates”. Sec. 469(c)(7)(B)(i). In this case, the equation
contemplated by the statute requires that we measure the extent
of the personal services that petitioner performed as an employee
of Symantec against the personal services petitioner performed in
real estate trades or businesses in which she materially
participated.
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Last modified: March 27, 2008